UK earnings puzzle caused by surge in low-pay jobs - unions

Reuters Staff

2 Min Read

Customers are served at a Macdonald's fast food restaurant in London, January 24, 2012. Hamburger chain McDonald's is creating 2,500 new jobs in Britain in 2012, with more than half going to people under the age of 25, a group hard hit by the economic downturn.
REUTERS/Finbarr O'Reilly (BRITAIN - Tags: FOOD BUSINESS EMPLOYMENT) - RTR2WS9T

LONDON (Reuters) - Record-low wage growth in Britain is largely due to a surge in jobs in poorly paying sectors and fewer people working in higher-paying industries such as finance and construction, research released on Thursday showed.

The report by the Trades Union Congress (TUC) showed that jobs in financial services, the highest-paying sector with an average basic weekly pay of £873.30, were down by 20 percent over the past five years.

In contrast, the greatest boost in job creation since 2008 has been in the care sector, where average weekly pay is £297.40 and employment is up 36 percent.

Employment in food and beverage services and services to building activities, the two lowest-paying industries, also grew by around a quarter, according to the report which was written by Incomes Data Services, part of Thomson Reuters.

The Bank of England has said it is looking at signs of wage recovery as it weighs up when to increase interest rates from their record-low level. The BoE kept rates at 0.5 percent on Thursday.

“Worryingly, the growth of low-paid work is as much a feature of the recovery as it was during the recession,” said TUC General Secretary Frances O‘Grady, calling on companies to create more well-paid jobs and increase staff pay to boost Britain’s economic recovery.

According to official data, average weekly earnings growth, excluding bonuses, in the three months to June dropped to 0.6 percent, its lowest level on record.

The TUC report also said a rise in under-employment was behind the lull in pay growth.

Analysis by the trade union umbrella group found that under-employment - or people working fewer hours than they would like - affected a record 3.4 million people earlier in 2014, with an increasing number of workers in part-time roles.

Writing by Hannah Murphy, Editing by William Schomberg and Angus MacSwan